Money is often considered a villain for all the unpopular reasons, but to me, it is just a tool to get things done, and it is up to you to use it for the choice of your deeds – good or bad. Today I chose to write about my relationship with money at various points of my life and my efforts to build financial discipline over the last few years. I am here to share my ups and downs during my journey with money and my path to recovery from repercussions.
Like most other conventional agricultural families, the head patriarch manages the finances at home. Every penny – incoming and outgoing gets audited meticulously to a large extent. For instance, if 5 litres of cooking oil are used instead of the usual 4 litres, the women in the kitchen go through a lecture to limit fried foods; While eating seasonal and local is resonating the popular trends these days. My periyappa always insisted on those lines, primarily for two reasons 1. Eat what you grow, 2. Save the fuel cost for our jeeps from taking weekly trips to plains to buy vegetables; They gave low-interest loans within the town to a trusted circle after assessing the risks and return of investments, and the list goes on like this. Sometimes, these measures look aggressive and frugal to some of the other elders in the family, let alone the kids. But we often forget the power of compounding that builds the wealth and make you wealthy, not your spending.
Most books about investment quote this Chinese proverb, “The best time to plant a tree was twenty years ago, and the second-best time is today”. While it sounds redundant, this applies to building wealth, saving money and investing. I had no savings as a child – not a piggy bank or a post office account. The first time I opened a savings account in the bank was to deposit my first paycheck of INR 5000 from my final year internship at IIT-Madras. I then opened a salary account after joining my first company in 2011. My relationship with money was just hand to mouth, and I relied on my next paycheck to pay bills for the next month. Thankfully I did not take loans or credit cards during the initial days making my financial discipline bizarre. With zero savings and blaming my small paycheck, I procrastinated on savings, let alone investments, until a fine rainy day. Six years ago, someone important to me had a family emergency for which he asked for a loan. I practically had some 2000 INR in my bank account to spend for the last week of the month. I could not help that person during his time of need. It made me feel guilty about the frequent takeaway foods, shopping for wants, expensive salon visits and tax cuts. That was the point when I started taking investments seriously.
I started with a recurring deposit with a lock-in period of 12 months. Though I could only allot a smaller sum at that point, I made sure to increase the amount the year after and added additional components such as Volunarty provident funds and mutual funds and diversified it. I had a bad experience buying and managing stocks, which resulted in short term losses that induced panic buying and selling, so I decided to stay away from them. Eventually, I could learn from failures and ramp up the habit. To my surprise, I could live comfortably and still manage to save up for rainy days and more. How much we save or invest does not matter as long as you keep your spending in check and repeat the process.
Over the years, I have noticed a few places where I mismanage my money and where I can do a better job. Things that I do and want to improve to maintain financial discipline. Such as – cutting down on fine dining and turning to home meal preps; staying away from luxury splurging on shoes, bags, watches and clothes to investing in high-quality pieces that do not scream brand names; Paying credit cards outstanding and home EMIs on time; checking financial hygiene, and diversifying portfolio periodically. Most importantly, start giving back to support a cause closest to you.
I hope this reset post helps you in your journey to financial freedom, Cheers to the good life!
Sharmili unplugged....... 